What a weird, weird company. There was a time when fully half of the talented rubyists I knew were joining LivingSocial all at once. And none of them could tell me why the company needed such incredible firepower. I guess they never figured it out.
LivingSocial: Employees' and Founders' Common Stock Now Worthless
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Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#52I wonder what will be of talent acquisition happened along the way.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#53Earlier quoted context omitted.
Point taken, and I'd rather not even attempt to define the two because I think that is outside the scope of HN altogether. I'm pretty new around here and the last thing I want to do is be starting political/moral/religious flame wars in a post about LivingSocial.
I disagree, it is will within the scope of HN especially if we're to prevent this sort of thing happening again from a founder/person on the ground level. The other guy is wrong, good and human progress can be paired well with technology and business solutions. It's called social venture, and it's possible. It's just not what the valley focuses on.
Like I said, I'm a bit of a lot of newb, but I appreciate the correction :)
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#54I know some of Living Social's original investors, and I approached them for an investment in my startup about 8 months ago. Part of our pitch was that daily deals solve and amazingly valuable problem in an inherently not-valuable way, and although our system would take less of a straight line, it would and already WAS solving the problem for a small subset of businesses in a more valuable and vastly more sustainable…
Do you think Daily Deals are a fundamentally flawed concept? I tend to think there's nothing wrong with them other than an over-saturation of the market and a prevailing attitude that says all you need is a sufficiently large mailing list to win. But that's just my outsider's view.
Coupons have been around for years and will continue to exist as "deals" despite different distribution methods that involve others.
Give the market two to three years to consolidate and reach a sustainable level that doesn't overwhelm or burn the merchants and end consumers.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#55Here are a few tips for others startup employees:
1. Take the least amount of stock possible - your startup is statistically unlikely to succeed. It'd be better to bump your salary up $10-20K than to get the stock.
2. Unless it's liquid - it's worthless.
3. Valuations pre-cashflow - are useless. Anybody can value anything at insane levels using just one dollar. I value HN at $1 billion by offering to buy only 1 share of 1 billion in common stock for $1 right now. See the implicit valuation leverage. I took a dollar, then invented the billion.
4. If you work for a "nasty" startup - one which people can consider to be negative long term to one or more parties - expect eventual collapse or flat line growth (Zynga/Groupon).
5. Companies exist to make management, investors and founders rich - they hold the vast majority of the stock - and benefit greatly from path dependence and network effects. You on the other hand don't. Expect to be screwed at any time.
Think of it like this. Managers/founders of most companies are pretty dipshit - how is it that they can own so much more stock? Simple. Be there earlier! Akin to how old money works. Imagine if you were the first person to squat land near what has now become Manhattan. You'd easily be worth hundreds of millions. There is obviously some skill in researching, predicting, working and acquiring land that will soon appreciate in value. But it's not worth nearly that much. Path dependence, luck and network effects do that. See GFC boom and that dumbass cousin who made and almost certainly lost millions in housing to understand how this works out.
Startups really aren't that different to a speculative investment in a house during boom times. Once you understand this - a lot of things start to make a hell of a lot more sense.
6. PG says be relentlessly resourceful. That's useful. But even better is to be relentlessly cynical.
Free t-shirts? Just an easy way to drop your salary and indoctrinate you - scratch that - it's a god damn uniform - freedom be damned! Free food? You took a $30-$40K pay cut to take the damn job - the food isn't worth a tenth of that + you're now working during lunch hours! Free hardware? That's only $2-$4K.
Hackathons? That's just work during your free time - or if it's during work time, it's a startup product you should own, but don't. More days off? Aren't you already working 60+ hours a week today! Culture shit after work? That's just more indoctrination. Gym membership? Only $200-500 - peanuts! Flexible work hours? That just means work more, but do it at times that aren't 9-5. Parental leave? Big companies and Europe have had that for ages.
Oh, and that culture fit crap? That's just discrimination - rebranded! What? You don't like what other late 20s upper-class educated males like? Be gone heathen!
End advice.
Not saying big companies or government jobs are any better. But at the very least you're already cynical about those things and demand to get paid well enough in risk-adjusted terms.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#56$110 million seems like a drop in the bucket if they really are bleeding money and have 4000+ employees, many of whom are probably very upset at the evaporation of their stock options.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#57I've always felt that companies like Groupon, LivingSocial, and Zynga do way more harm than good. Early on I was impressed by how well these startups were able to capture mainstream attention and change the way so many people live and behave. But at the end of the day, what value does Groupon and Zynga actually add to society? I'm of the opinion that most daily deals and social gaming companies bring out our most pri…
If Zynga actually made games, I'd say that entertainment is one of the most valuable services that a company can provide. Too bad they don't.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#58Earlier quoted context omitted.
They are flawed unless you can do something about retention. Has anyone tried the concept where the "deal" is that you go, name the site, and get a coupon giving you a deep discount the SECOND time you go back to that store? That would seem to make more sense. Because everyone that the store gives the deal to, has actually paid full price once. And wanted to go back. And if you've been twice, you're more likely to go…
CVS, El Pollo Loco to name 2 that I've interacted with lately. When you buy something there, they give you coupons at the register for next time that are pretty deep. I'm guessing this is a proven effective marketing technique judging by the big companies using it.
So for a restaurant for example the coupon can be customized based on the age, gender, how many in the party and what they already ordered. The value of the coupons could be even computed in realtime, based on supply and demand + some safety rules built in. Everyone at a different times could get a different coupon for a different value.
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#59You never would have thought by their office space that anything was wrong... http://www.businessinsider.com/living-social-office-tour-201...
So true, also surprised they didn't have a super bowl commercial.
It's like the dot com hype all over again but with crazy short term revenue that's unsustainable
Re: LivingSocial: Employees' and Founders' Common Stock Now Worthless
#60As an independent restaurant owner, I can't say I didn't expect to see this one day. The model simply doesn't work, at least in our industry. The restaurant loses money on every single "daily deal" that is redeemed. With LivingSocial or (insert any other daily deal site here) taking half of the deal, the restaurant is simply left with 25% of the revenue generated. This does not even cover our food costs, let alone labor.
The rise of daily deal businesses have brought up a couple of fundamental issues for us: 1)Customers are often daily deal hunters - We would be willing to take the one-time loss on a daily deal, if we had a chance of converting the customers into regular diners. However, we have found that most people who purchase these deals, simply move on to the next deal after they are done.
2) Cheapens the product - Once you have lowered the price for a product, in this case food, the guest automatically ties the value of that product back to the price they paid. This is a huge problem for restaurants in particular because the guest is not willing to pay full price for the product even if they liked it. Now your product is valued at half of your current price, and to get that customer back in the door, you have to offer a significant discount again (most likely another daily deal).
3) Cannibalizes our existing customer base - One of the worst unintended consequences of using daily deals is that some of your regular guests start waiting for these deals, and only come in when they are available. This hurts in two ways: 1) regular guests are now spending less than they were the last time they came in, 2) regular guests are now waiting for a LivingSocial/Groupon deal to become available before returning to the restaurant causing them to wait longer before returning to the restaurant.
I believe that a company that provides customer acquisition via deals could be extremely valuable, but they must do it properly, and most importantly it must benefit their customer (in this case the restaurant). Until a company learns how to ensure that a business is obtaining a profit from providing this massive discount, without cheapening the product, and cannibalizing existing sales, the daily deals industry will continue to fall by the wayside.